Multivalued Treatments and Decomposition Analysis: An Application to the WIA Program

49 Pages Posted: 28 Nov 2018 Last revised: 20 May 2019

See all articles by Wallice Ao

Wallice Ao

Institute for Defense Analyses

Sebastian Calonico

University of Miami - School of Business Administration - Department of Economics

Ying-Ying Lee

University of California, Irvine - Department of Economics

Date Written: May 17, 2019

Abstract

This paper provides a general estimation and inference framework to study how different levels of program participation affect participants' outcomes. We decompose differences in the outcome distribution into (i) a structure effect, arising due to the conditional outcome distributions given covariates associated with different levels of participation; and (ii) a composition effect, arising due to differences in the distributions of observable characteristics. These counterfactual differences are equivalent to the multivalued treatment effects for the treated under a conditional independence assumption. We propose efficient nonparametric estimators based on propensity score weighting together with uniform inference theory. We employ our methods to study the effects of the Workforce Investment Act (WIA) programs on participants' earnings. We find that heterogeneity in levels of program participation is an important dimension to evaluate the WIA and other social programs in which participation varies. The results of this paper, both theoretically and empirically, provide rigorous assessment of intervention programs and relevant suggestions to improve their performance and cost-effectiveness.

Keywords: program evaluation, decomposition analysis, treatment effect, propensity score, counterfactual distribution, multivalued treatments, semiparametric efficiency

JEL Classification: C14, C31, H53, I38

Suggested Citation

Ao, Wallice and Calonico, Sebastian and Lee, Ying-Ying, Multivalued Treatments and Decomposition Analysis: An Application to the WIA Program (May 17, 2019). University of Miami Business School Research Paper No. 18-16. Available at SSRN: https://ssrn.com/abstract=3276370 or http://dx.doi.org/10.2139/ssrn.3276370

Wallice Ao

Institute for Defense Analyses ( email )

4850 Mark Center Dr
Alexandria, VA 22311
United States

Sebastian Calonico

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States

Ying-Ying Lee (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States

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